Debt consolidation in Massachusetts can be a lifeline for credit cardholders drowning in high-interest debt. Individuals who carry multiple credit cards may find themselves in financial woes, especially when they can’t keep up with payments. Other unsecured debts such as payday loans often come with ridiculously high-interest rates, which may compound the financial strain of borrowers. However, consolidation could be the ideal option if you’re looking to settle all your debts and get your finances back on track.
How Does Debt Consolidation in Massachusetts Work?
If you’ve not heard of debt consolidation before, you might be wondering what it is all about. Basically, consolidation means combining all your debts into a single monthly payment. Instead of tracking several due dates and risking a missed payment, debt consolidation lets you focus on one payment.
In addition to making your debt more manageable, consolidation can significantly reduce the interest rate on your debt. To find the ideal solution for Massachusetts debt relief, you have to consider the kind and amount of debt you have and the time frame in which you’re looking to settle the debt.
Debt consolidation in Massachusetts works best if you’re looking for a simple monthly program, owe more than $10,000, and are willing to spread your payments over a longer period.
Consumer Debt in Massachusetts
The Bay State boasts the second-highest real per capita income ($65,853) – some way above the national average of $53,504. Further, Bay Staters rank among the most fiscally responsible citizens, carrying about $5,141 in credit card debt. In addition to carrying considerably healthy debt, Massachusetts residents have good payment habits hence their good credit histories.
Despite their high incomes, residents of the Bay State have high consumer debt levels, particularly in the form of mortgages. Yet, very few residents turn to bankruptcy for debt relief. Those who struggle with debt readily explore debt consolidation options to stay debt-free.
Viable Solutions to Consumer Debt
It is easy to panic when your debt is piling and you are losing control of your financial situation. Some people prefer to wait for the Statute of limitations to expire – where creditors can’t file suit against you in an attempt to recover the money. In Massachusetts, that means waiting six years. Rather than adopt such passive strategies, you be proactive and turn your financial situation around in less time.
Certainly, debt consolidation in Massachusetts is the ideal option for debt relief if you have manageable debt and good credit. However, it is not the only way to deal with debt. Several other debt relief programs can help you find a way out of financial difficulties.
Credit Counseling/ Debt Management
Solving your debt problems could be as simple as making a budget to see your incomes and expenses and where you can cut on excessive spending. A credit counselor can help you manage your debt by assessing your financial situation and creating a plan to help you pay off your debt over a given period.
Non-profit credit agencies also negotiate with creditors to reduce the interest rate on your debt. Through debt management, you can make monthly payments that fit your budget. Credit scores are not determinative when joining a debt management program. However, any concessions received could be terminated if you miss payments.
Debt settlement is different from consolidation and counseling but a viable option for debt relief. It helps resolve delinquent debt by offering your creditors a lump-sum payment for part of the debt you owe. While this sounds too good to be true, it often happens. However, creditors are not obligated to reduce your debt, even if you work with a reputable debt settlement company.
Filing for bankruptcy is a last-ditch choice when other options won’t work. Declaring bankruptcy is reasonable if payment of all your unsecured debt with any of the other options is likely to take more than five years. Bankruptcy wipes your slate clean, and you get a second chance to build good credit.
Strategies for Debt Consolidation in Massachusetts
If you’re looking to solve your debt issues through consolidation, you can do it by taking out a Massachusetts debt consolidation loan or doing a credit card balance transfer. Let’s take a look at how these strategies work.
Debt Consolidation Loan
One way to do debt consolidation in Massachusetts is using a loan to pay all of your debt and then make payments on that loan. Debt consolidation loans can be secured or unsecured. Consolidation loans often come with lower interest rates, which means you can save hugely on payment costs.
Unsecured consolidation loans can be obtained from banks, credit unions, and even debt consolidation companies in Massachusetts. You can even consolidate your debt by borrowing money from your family members or friends. Securing a personal loan could be a massive money-saver as little to no interest is charged, and payment terms are negotiable.
Secured consolidation loans require collateral to obtain. These are often referred to as homeowner loans or second charge mortgages as they are obtained against the equity in your home. You can also obtain a home equity line of credit, from which you can draw and settle your debt.
Because you are using your home as security, lenders are often willing to lend larger sums to help you settle all your debts. Conversely, you can expect smaller sums and higher interest rates than secured loans if you decide to borrow a personal unsecured loan.
Credit Card Balance Transfer
If you’re looking to consolidate credit card debt, you could consider doing a balance transfer. This involves moving your balance from multiple credit cards to a single credit card. Most companies that issue balance transfer credit cards offer zero or low APR for the introductory period. Paying all your debts within this period means that you avoid costly interest charges.
Before doing a balance transfer, find out the fee charged and whether there is a limit on the balance to be transferred to your balance transfer credit card. Also, ask about the applicable APR after the introductory period.
The Bottom Line
Even with attractive income levels and decent credit histories, the high cost of living in the Bay State will likely push some people into debt. If you’re already in a difficult financial situation, you may consider the various options for debt relief. Massachusetts debt consolidation may come in handy if your debt is manageable and you have good credit.
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